Monday, 19 December 2016

The
appointment of Stan Marshall as CEO has not diminished the culture of secrecy at
Nalcor. It was born under former CEO Ed Martin and current V-P Gilbert Bennett
and is entrenched in a number of insidious ways, each of which ought to be
exposed. The more prescient examples are ones that receive the greatest
attention – this post describes one more. Still, no one should think they are
outcrops of randomness even if discussion of the larger problem awaits.

What should
be clear to all, however, is this: if Stan Marshall has brought change to
Nalcor’s governance practices they elude the most ardent observers.

Likely,
Marshall is more preoccupied with deciding on which knee the CEO of Hydro
Quebec will sit - as he come to grips with the reality that a “bad” and a
“necessary” deal are one and the same.

That, too,
is an important subject especially given the negotiations underway with la belle province. Marshall likely intends to “excise” the Muskrat Falls project –
remove - cut it out -from the “Liberal” narrative; Ball not having had the good
sense – let alone the instinct – to keep it grafted onto the Tories’ hide.

CEO Stan Marshall

Worrisome,
to be sure, is the price Hydro Quebec will extract for this convenience. But the endemic
deception is a guarantee that when the “deal” is done the “perpetrators” – that's the right word - of the Muskrat Falls project will be excused from responsibility and exposure.

Likely –
unless the public demands a full judicial inquiry into why the project was
contrived using false assumptions and false DG-2 estimates - issues which preceded bungling by inexperienced project management – it will be buried in a labyrinthine legal construct. The deal is
likely to include, apart from Muskrat and Gull Island, some of this province’s
rights to the Upper Churchill.

The agreement will be written by Hydro Quebec
lawyers, too – the thunderous jeering directed at Nalcor’s overpriced beagles by the Justices of the Quebec Superior Court - having barely died down.

There is
much to be buried – and it will be buried – because so many people are
complicit.

The latest emblem of a failed project – one that V-P Gil Bennett had hoped to give
subterranean treatment - is the leaky cofferdam.

Long dubbed
“the cable guy” few could comprehend, at the start, his suitability to manage a
megaproject. But as if to confirm that he prefers making omelets without
breaking eggs Stan Marshall kept him around.

Nalcor V-P Gilbert Bennett

The temporary cofferdam is a very basic
civil works job. When you can’t get even that right, when your quality control
regime will allow kilometers of faulty transmission line to be shipped and strung,
when most everyone, except Gil Bennett, acknowledges the presence of quick clay
at the North Spur – there is little to claim, except cover-up.

I can still
hear Ed Martin’s exhortations of the “hundred year project” as a giddy media drank
in the spin master’s braggadocio. Now, it is difficult to imagine Muskrat will
ever get a chance to age given the multiplicity of problems – including frazil
ice - that cause further delays.

None of this
has subdued the Nalcor PR machine, however. Again, they are in high gear, getting
ready to exhort new beginnings, and to give caution to bloggers using
expressions uncomplimentary - like “avaricious” – as Hydro Quebec offers to
hide bad judgement, waste, extravagance, and incompetence in return for a “deal” expected to masquerade as “burying the hatchet”.

Of course, the
perfect way to bury a ‘crime’ is to change the narrative of Muskrat Falls.
Revise history. Excise and expunge the “boondoggle”. Bury it deep enough to make
it appear it had never existed. All the better if the cost of the waste and
incompetence are deferred to the next couple of generations.

Recently, David
Vardy learned the extent to which Nalcor will go to keep their “boutiller” (screw-up) buried. The former public servant whose tenure included Clerk of the
Executive Council, President of the Marine Institute, Chair of the Public
Utilities Board, and critic of the Muskrat Falls project - set out to have the November 2, 2016 Report of the Independent Engineer laid bare.

Vardy’s
story is disconcerting, as are so many others. Fortunately, it is supported
by written correspondence – not the easily denied verbal kind – thanks to the
Access to Information and the Protection of Privacy Act.

This is how
the exhumation went down.

David Vardy
wrote Nalcor on October 5, 2016 stating:

On November
2, 2016 Nalcor responded to Vardy:

Nalcor dithered
for almost a month before informing Vardy it did not wish to release the
Report.

Then what?

1.A Nalcor staffer called Vardy to
inquire if he would agree
to withdraw his ATIPPA request…now that his Application was rejected. Vardy
refused. Certain that Nalcor lacked the authority to withhold the Report, the
former Cabinet Clerk planned to appeal the decision to the Information and
Privacy Commissioner - which he did.

2.Nalcor invoked section 29(1)(b) of
the Act as the basis for withholding the document – the particular section is
reproduced as follows:

Nalcor had claimed that the Report
constituted a “formal research report” or an “audit report” when, in fact, it
was neither. In his letter to the Information and Privacy Commissioner Vardy suggested it was merely a report – no more no less - to which the
lenders and the federal government, as “guarantor” of the Federal Loan
Guarantee, were entitled under part 4.9 of the “Term Sheet”. That document describes
the obligations of the province to those parties. The following snippet
confirms Vardy’s contention:

Note the
last sentence of this part 4.9” “The Borrowers (Nalcor) ….shall have no
contractual or other relationship with the IE other than ….to pay the fees of
the IE”.

Yet, Nalcor
was claiming not just that the IE Report constituted a “research” or “audit”
report for them, but implicitly that they were “the head of the public body”
claiming ownership of the Report. Only proof of such a status would have entitled
them to declare the Report “incomplete” which, in turn, would have entitled them
to make an “order for completion”. On any other basis Nalcor could not refuse Vardy’s
request.

The absurdity
– and the dishonesty – is that the Federal Government, not Nalcor, appointed
the IE (MWH Global Inc). The terms of
the loan guarantee explicitly demand that Nalcor conduct an arms-length
relationship with the IE – except to pay the company’s fees.

It is
noteworthy that during the time Vardy was corresponding with Nalcor and the
Information and Privacy Commissioner, he was also corresponding with the
Minister of Natural Resources on a tangential matter,namely the acquisition of MWH Global
by Stantec, a major contractor with Nalcor. Part of Sioban Coady’s reply to
Vardy is reproduced below. Says the Minister:

In her
response to Vardy, Minister Coady also indicated: “Nalcor Energy and the
Government of Canada are making arrangements to address the issue to ensure the
continued independence of the IE.”

Vardy later
noted for this post that he found Nalcor’s involvement in resolving this
conflict was in itself indicative of the unusual control which Nalcor appears
to have over the IE, including a role in finding a successor to MWH Global.

David Vardy

In any
event, had Vardy not persisted and informed Nalcor of his intention to appeal
their decision to the Information and Privacy Commissioner, the IE’s Report could
have been delayed until December 23, 2016. Vardy would have had to re-apply under the rules
of ATIPPA – and wait a second time.

What
happened next?

Vardy
explained that on December 3rd, 2016 he was “rummaging” through
documents posted on Nalcor’s web site and “came across” the November Report of
the Independent Engineer – the one Nalcor would not give him – the very one
under appeal to the Information and Privacy Commissioner.

Nalcor had
refused Vardy even the courtesy of an email advising him that they had relented
and released the document. A less petulant V-P Gil Bennett might also have sent
him a copy of the Report as an attachment.

The IE’s
Report wasn’t all that Vardy found. Posted, too, and dated December 2, 2016 (likely
the very same day the Report was released) was a letter addressed to the (fake)
oversight committee. It seems, having failed to get the IE to change its Report
to reflect Nalcor’s view, the V-P took the peculiar step of writing to
that committee instead.

Bennett
stated he was providing “some additional context…in
relation to some comments made by the IE in the November 2, 2016 report”. Since the oversight group relies totally on
Nalcor and conducts no investigations of its own – the letter is the equivalent
of Gilbert Bennett talking to his mirror.

Bennett’s
letter notes the Tube # 2 falsework failure (the cribbing which collapsed
immersing a group of workers in concrete) on which the IE had commented
critically. He states that the input of the IE was that of an “observer”.

It is ironic
that when it is convenient Nalcor describes the role of the IE as that of an
auditor but at other times they are simply “observers”. Granted there were
insurance issues at stake in the comments on the falsework failure. But it
makes using grounds - clearly in violation of access to information legislation
- for withholding the report from disclosure appear very contrived.

Bennett’s defensiveness
is surely a warning Quebec Hydro is sniffing out his grand bousiller (big
screw-up).

Stan
Marshall and Dwight Ball just want Muskrat off their plate. They want it over - whatever the
cost.

It's astounding that the secrets, coverups, and downright lies continue to go on and no one held accountable. If Nalcor was "in the private sector" rather than a crown corporation, and exposed by bloggers such as on this site, the media would be all over it and action/investigation would have been conducted long ago. But no,Government and the "law" continue to allow this to go on.I've said it before and I'll say it again, W5 and/or The Fifth Estate would get to the bottom of this fiasco and then we would see a public uproar which should have happened by now.If it wasn't for Bloggers on this site the public would be totally in the dark. A public inquiry would then follow and those who should be held accountable would be held accountable

This post shows the contempt Nalcor has for the rule of law, for the formal roles assigned to the IE, for political oversight and most of all for the "chumps", the rate/taxpayer who will be stuck paying for the disaster for 57 years.

When the regulatory tables have been overturned to give Nalcor (and all their fictions starting with "least cost")a free hand without scrutiny, ignoring the ATTIPA rules are small potatoes for Bennett and his stable of incompetents.

The arrogance of spreading this kind of manure on a technocrat as accomplished as Vardy speaks to how little they care for anything except the political stranglehold they have on access to information or oversight of any kind.

That Bennett remains protected and sheltered from hard questions at this point is a disgrace. With the impotence of the traditional media he continues to ride roughshod over the boondoggle. With the complicity of the Opposition who are incapable or unwilling to examine the contracts, performance. assumptions or unsubstantiated ongoing claims by Marshall/Bennett, the demonstrated incompetence is rewarded rather that punished.

The only hope is for the informed and independent like Vardy to move beyond their comfort zone, from good analysis to effective political action.

The times require more than a calm documentation of the demise of the treasury while the smug perpetrators hide the truth of their dysfunction.

Those that know must do more than speak politely. They need to be courageous and with the like minded ACT NOW! Your future depends on wiping that smug smile off Gil's face and demanding the truth.

Before breakfast, I was concerned whether Uncle Gnarley would be taking a Christmas break early, and there would be no report today. When I attempted to tune in, my internet was down. Not good. Press the modem reset button instructed my wife. Sure enough, after 30 seconds the red light turned to green and Google was back on line. I was soon reading the headline, which gave me my first chuckle `Gil Bennett talks to his mirror` I read this piece more slowly than usual. Its says a lot, including that under Marshall there is no change in how Nalcor operates. Seems Liberty has said the same about Nfld Hydro`s operating culture. I appreciate Uncle Gnarley`s explaining some choice words for some one less skillful with languages, like me (the screw up). I got `la belle province`, the beautiful province ( as my father had once salvaged a ship called THE VILLAGE BELLE, and I had researched the meaning of the word BELLE, and understood it meant a beautiful girl, and so ....a beautiful schooner. If that ship had not been also study, I would not be alive.... but I go off on a tangent here. Chuckle number two was when it was stated that Vardy went on a TANGENTIAL mission. To think that I too use the tangential process at times, which may be considered a deficiency or an attribute. In a small way it may boost my ego, to have a trait similar to the accomplished Vardy. My last chuckle came near the end, where it is explained why Bennett is looking in the mirror. Now methods of thinking seem to be tied to geometry. Tangential, is a word that indicated veering off the path in another direction. Tangential thinking at its worse can mean middle stage dementia. Who could think that of Vardy. But tangential thinking, some suggest is a trait that is common with inventors... think Steve Jobs or Edison. Tangential thinking, in conversation, is fine, when it is temporary, and you come back to the the issue at hand. Again, the geometry thing... you make a point, but close the circle by coming back around..... a good practise and shows soundness in thinking. See how the master here uses this technique, and at the end explains why Bennett is looking n the mirror.For Uncle Gnarleys piece I ticked all three: funny, informative and interesting. I need to take this up with Bruno..... maybe I never had a stroke as he suggested. Winston Adams

Ah, Bruno....you are alive.......thought we lost you last week. Whether my questions to you (how green are you) that went unanswered, or Lahey`s challenge to you to prove your assertion that Nalcor lost hundreds of millions of dollars by wheeling power through Quebec..... still waiting for you to show you were correct......you have not. Now ......me meandering! You youandering! See how I sneaked in the The Village Belle thing. You see, on the boondoggle, the Port Nelson project, the government wasted millions, but some made fortunes. My father, the son of a poor swiler, an illeriate fisherman, salvaged that vessel and became the richest man in his home community. There are many parallels with Port Nelson and Muskrat. By 2041 I hope to publish the story of Port Nelson, and by 2081 the crime of Muskrat may be fully exposed. It may take a while to close the circle. Michael Harrington in his OFFBEAT history pieces wrote several pieces titled the SAGA of THE VILLAGE BELLE. That was the 1980. Mostly on tidbits I provided him, but good pieces. Can`t you see I am getting some early pre-publication interest in my story I want told. And Uncle Gnarley asks only a small cut of profits for the use of his blog. He is a businessman after all. And we may work out an editing arrangement, who knows. Winston

Where did the Rate Stabilization Plan refund come from ? According to Nalcor/Hydro NL in an article in the June 17 2016 telegram this is where it comes from.“Meanwhile, power customers continue to wait for distribution of the Rates Stabilization Plan fund — a surplus pot of money that developed as a result of the shutdown of the paper mill in Grand Falls-Windsor, with Hydro suddenly able to use the hydro power from that operation to fund the island’s general customer base.”Is the reason that NL Hydro put these savings in a “pot”, instead of lowering rates, because Nalcor/Government didn’t think the optics would be very good for their hopes of developing Muscrat Falls? Holyrood power was not needed as much because of the additional source. Disregarding the fact that NL Hydro/Newfoundland Power had tens of millions of dollars in the “pot”, NL Hydro sent a Rate Stabilization Plan to the P.U.B. that read in part:“ The price of oil has increased and therefore electricity rates are increasing as well,” said Jim Haynes, Hydro’s vice president of regulated operations.“The fuel price projection used for setting electricity rates has climbed from $84 per barrel to $103 per barrel — almost $20 more per barrel over the last 12 months — and electricity rates will rise by approximately seven per cent effective July 1, 2011. The cost of oil is a direct pass through to consumers and neither utility receives any profits or benefits financially from changes in oil prices.”This R.S.P. was sent prior to the 2011 Provincial Election and probably had an effect on the result. The Premier Elect was quoted as saying that the result was a mandate approving the Muscrat Falls Project. Another R.S.P. was sent in 2012 “Rate stabilization plan Newfoundland” “Rising oil prices cause increase in Rate Stabilization Plan adjustment for electricity consumers,” April 24, 2012: “Newfoundland and Labrador Hydro (Hydro) filed an updated fuel price projection for the Rate Stabilization Plan (RSP) with the Newfoundland and Labrador Board of Commissioners of Public Utilities (PUB) today. This will result in an increase in electricity rates to Newfoundland Power and therefore most electricity consumers. The fuel price projection used for setting electricity rates has climbed from $103 per barrel to $119 per barrel — $16 more per barrel over the next 12 months. As a result, the wholesale rate for electricity will increase by approximately eight per cent resulting in an RSP adjustment to consumers of an estimated 5.4 per cent effective July 1, 2012.”It should be noted that the price of fuel to run Holyrood never went above ninety dollars from 2011 to 2013. The 2012 R.S.P. could have had an effect on the Government Loan Guarantee and the sanctioning of the project. These actions by NL Hydro/Nalcor, the P.U.B., and Newfoundland Power should be investigated by the Advocate GeneralGerry Goodman

Bruno, my son..... granted I used twice as many words as you to comment on today`s piece. But we took up identical space, as you use double or triple spacing. There was a time when one might say we waste a lot of ink. Now it seems we waste a lot of server space with too many gigabytes. The old version still sounds better. One should use the shortest words possible, and the older short words are best. So, is Vardy a technocrat as you suggest, and is that a good thing! Of all the ink used on Muskrat (and Maurice uses a lot of coloured ink in his many charts and graphs), nevertheless , we can still sum up this way:Muskat Falls is no goodChop it up for firewood.If the fire do not burn Take it out for another turn.

I add this verse

Politicians is no goodLock em upThey is the hood.If the locks do not hold Chop em up for fire wood.

Now get cracking. We`can use this chant during the revolution you suggest.

I look forward to reading this blog. Unfortunately it seems to have been hijacked by a couple of children. I think it is time for Winston & Bruno to quit with their petty tit for tat nonsense. They both appear to be in their own little world casting barbs at each other, instead of offering constructive comment on the topic at hand. For Gods sake...Grow up!

Sometimes we cast Spurs. I am having a little fun,and I hope Bruno is likewise. And opinions by anonymous do not not have much weight. It takes at least 4 cowardly anonymous comments to equal one with a valid name attached, do you think. Grown ups should know that I raised a serious point with Bruno, on whether QH is robbing Nalcor on power being wheeled through Quebec. Quebec people are our neighbours,and Lahey wrote as a private citizen, and Bruno should not make false allegations as he seems to have done. I am not certain who is right, but I believe Bruno is not just wrong, but grossly wrong .....someone should know. Where is the maturity, Anonymous, to ignore Bruno`s allegation. If Bruno is right, I will kiss and make up.Winston

It seems Russell,(I like to call him Russ) at the Telly (or RW as Bruno refers to him) is losing his following. His editorial on Saturday shows not a single comment online. Uncle Gnarleys recent pieces are pushing 80 comments ( and I do my bit to keep that number high). Russ`s piece was titled; MUSKRAT: NO THANKS.Now how can Russ bring the tragedy of Muskrat to the people if he cannot garner a single comment. Now I can analyse Russ`s piece to show where he went wrong, from a layman`s perspective of course ( and Russ might get some insight from Uncle Gnarley`s clever approach). Gosh, I might even take up journalism. If the Telly is the standard, it is not so hard. And the Telly....the torment of all those pop up ads! And the screen keeps jumping around like a jack in the box. Only for Russ`s sometimes good pieces, I would tune out completely.Winston

It's time for the Construction Manager's Yearend Cost Management Report. What is the forecast final cost of the project? Have you factored in the additional costs of the cofferdam repairs? What other cost factors have to be dealt with? Where will Nalcor find required funds to complete the project?

Stan be honourable to your profession. Are you in any way, prevented by your peers and management, from practicing your Engineering ethics and codes? Tell it like it is Stan.

When all of this comes to pass, and I'm certain it will, we won't need an Inquirey to determine fault. We already know who the culprits are. They are all guilty in the court of public opinion and that is all we need. They will, each and every one, politician, bureaucrat Crown Corporation Excecutive et al, be tarred with the same bush. They will not be forgotten. They will be cursed for generations.

What news from the site? Is the cofferdam holding up against hydraulic loading? Who are we, the public, relying on for news from the front? A drone flyover with pictures would be beneficial, as in 1917 blimps over the trenches at Monchy. Sadly, that did not end well.

What is fact or not fact, when asserted by you Bruno, would be taken more serious if you confirm the source of your statement to Mr Lahey that Nalcor lost hundreds of millions of dollars wheeling power through HQ. Still seeems a false statement by you, and you have not admitted it.

Agreed, Ex Military. Bruno is often first with long comments, some ok, but not very willing to admit a false statement, whether an error or deliberate. He says no error but will not back up what he alleges. What does this say about Bruno. Nalcor is bad enough without resorting to that. Fess up Bruno, and move on.

T`was the night before SanctionWhen all through the HouseNot a critic was stirringNot even a louse.

Their speeches were stuffedIn their pockets with careIn hope than Ed Martin Soon would be there.

The contractors were nestledAll snug in their bedsAs visions of profitsDanced in their heads.

This is not copyrighted, so feel to finish it.

To fellow critics of Muskrat: Des Sullivan, Dave Vardy, Cabot Martin, Maurice Adams, Russ at the Telly, and others, including our neighbour Mr Lahey (I leave out Ashley to lease Bruno): A Merry Christmas and a hopeful New Year. To Bruno, and he who comments and appeals to God that Bruno and I grow up: It is not if you win or lose but how you play the game. Always keep your stick on the ice. Join me in the Man`s Prayers ( like members of the Possum Club) I am a man I can change Maybe

I highly recommend reading Ed Hollett (Sir Robert Bond Papers) blog that says the original Alstadi contract was 1 billion and now 1.8 billion, that Nalcor is playing loose with the numbers, as usual. And read Tom Adams Energy blog. Highly recommends a stop and rethink on Muskrat. He says that with power rates to double, it will drive the demand low so that the energy saved on the grid will be about equal to what Muskrat will produce,,,,,, the effect on ratepayer is that there will be energy poverty......SURPRISE! And Russell at the Telegram reports about contractors going flat out installing mini-split heatpumps. I have been testing such systems, started in April as temperatures at -8 C were warming, and now resuming with temperatures having reached -11C. At minus -10C we are using 2.1 kw to heat a 4000 sq ft house. The baseboard heaters(18 kw are shut down). We expect not to hit 5 kw of energy at -20C.We are waiting lower temperatures for monitoring. Residents are not waiting for double the rates, they are aware of this technology and are acting accordingly. In Nova Scotia in 2011, 20,000 units were installed in one year (they had incentives). With or without incentives, Nflders are moving rapidly in that direction, and will negatively impact power use and peak demand.Winston Adams

The Muskrat Falls Oversight Committee, or at least the public release of information is nothing more than a sham. However, there are times that there are some useful pieces of information. Take for example in November there were 3 meetings held. The first was held on November 15 A look through the minutes http://www.gov.nl.ca/mfoversight/minutes/pdf/mf_oversight_meeting_32.pdf show that there was no mention of the Independent Engineers report from July, which was apparently issued in September. Then there was a second meeting held on November 23rd, to discuss the content of the Independent Engineers Report which was received by the provincial government on November 22nd! Then there was a third meeting held on November 28th to present the findings to the new Clerk of the executive council, who was not present during the meeting on the 25th.

Nalcor were asked to provide explanation's of these negative findings to the committee.

This raises some very interesting information. Was Nalcor holding back not just information from David Vardy but from the government as well?

NRCan confirmed that Nalcor received the report on SEptember 20th. Yet this report was not transmitted to the MF oversight committee until November 22?

Was the only reason that Nalcor communicated this to the oversight committee was due to a ATIPPA raised by Dave Vardy? Did Nalcor intentionally delay the release?

Dave Vardy has long acted as the official opposition on this project. Now it seems he is doing the work of the ADM, DM and even the Clerk themselves. It is inexcusable that the oversight committee were not asking for a copy of this report, being at least as proactive as Dave Vardy.

Is there no wonder that this project cost continues to skyrocket... out of control.

Meanwhile the public are more in the dark with this liberal government than even with the PC government. there has not been a oversight report issued since DEcember 2015. We have some visibility on the cost growth, but we have no visibility on the schedule progress.

Then we have a 80% increase in the budget to Astaldi. This leads to many questions. What percentage of AStaldi's ask was paid by Nalcor? Did this go to third party arbitration? Why are we paying this? Did cabinet approve this change order, did it need to go to the house or does Nalcor truly have a blank cheque.

It is time to stop the generation portion of this project to have a truly independent review of the performance.

The events of the past week are deeply worrying. There can be no faith left in the project team, or the governance of the project.

The $CAD has lost 35% value since pre-construction budget estimates were prepared. The longer a project like Muskrat is extended, the higher the numbers will run, irrespective of Work Scope and Site Conditions changes. What was the contingency provision, (Cost risk), in the project start budget? Had a 100% contingency been included at the "Go" decision stage, what are the possibilities that financing would have been granted?

About Des Sullivan

Uncle Gnarley is written by Des Sullivan, of St. John's.
He is a businessman engaged in real estate, retail and development companies.
A Director of Sullivan Capital Corporation, he is a former Executive Assistant to Premier's Frank D. Moores (1975-1979)and Brian Peckford (1979-1985).
He also served as a Part-Time Board Member on the Canada-Newfoundland Labrador Offshore Petroleum Board (C-NLOPB).
Uncle Gnarley permitted the use of his highly regarded name provided he could have full access to state his own rather unequivocable opinions. (A more detailed Profile of Uncle Gnarley is described in the very first Post entitled "Uncle Gnarley is alive and well" found on this site.
Sullivan is a firm advocate of sound fiscal management by the provincial government and intends to use this Site as a forum for commentary on the major issues of the day. Says Sullivan, "Newfoundland and Labrador inspires debate on a variety of issues, a veritable Muskrat Falls of opinion".
Readers are invited to leave their opinions, too.
Uncle Gnarley will post every Monday, and more often as events warrant.